The market's sharp downturn since October has intensified this month, erasing all its 2018 gains and nudging the S&P 500 closer to its worst year since 2008

Published Dec 28, 2018 at 11:46 PM

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Trader Craig Esposito works on the floor of the New York Stock Exchange, Friday, Dec. 28, 2018.

Wall Street capped a week of volatile trading Friday with an uneven finish and the market's first weekly gain since November.

Losses in technology, energy and industrial stocks outweighed gains in retailers and other consumer-focused companies. Stocks spent much of the day wavering between small gains and losses, ultimately unable to maintain the momentum from a two-day winning streak.

Even so, the major stock indexes closed with their first weekly gain in what's been an otherwise painful last month of the year. The Dow Jones Industrial Average and S&P 500 rose more than 2 percent for the week, while the Nasdaq added nearly 4 percent. The indexes are still all down around 10 percent for the month and on track for their worst December since 1931.

"It seems like convulsions in either direction have been the real norm for much of December and that's certainly been the case this week," said Eric Wiegand senior portfolio manager for Private Wealth Management at U.S. Bank. "The initial push higher and then seeing it subside a little bit is perhaps getting back to a little bit more of a normal environment, reflecting the reality that we have still a number of issues overhanging the market."

Dow Jones Industrial Average Largest Daily Point Loss

Date

Close

Points change

% Change

Dec. 24, 2018

21,792.2

−653.17

−2.9

Feb. 5, 2018

24,345.75

−1,175.21

−4.60

Oct. 10, 2018

24,345.75

−831.3

−3.20

Dec. 4, 2018

25,027.07

−799.36

−3.10

Sep. 29, 2008

10,365.45

−777.68

−6.98

Oct. 15, 2008

8,577.91

−733.08

−7.87

Sep. 17, 2001

8,920.70

−684.81

−7.13

Dec. 1, 2008

8,149.09

−679.95

−7.70

Oct. 9, 2008

8,579.19

−678.91

−7.33

Feb. 2, 2018

25,520.96

−665.75

−2.54

Aug. 8, 2011

10,809.85

−634.76

−5.55

Apr. 14, 2000

10,305.78

−617.77

−5.66

Data source: measuringworth.com

The market's sharp downturn since October has intensified this month, erasing all its 2018 gains and nudging the S&P 500 closer to its worst year since 2008.

Investors have grown worried that the testy U.S.-China trade dispute and higher interest rates would slow the economy, hurting corporate profits. This week, with trading volumes lower than usual because of the Christmas holiday, served up some pronounced swings in the market.

A steep sell-off during the shortened trading session on Christmas Eve left the major indexes down more than 2 percent. On Wednesday, stocks mounted a stunning rebound, posting the market's best day in 10 years as the Dow shot up more than 1,000 points for its biggest single-day point gain ever.

The market appeared ready to give much of those gains back on Thursday, before a late-afternoon reversal that erased a 600-point drop in the Dow left the market with a two-day winning streak.

"The market was so oversold and then Wednesday and Thursday were key reversal days, but also stronger closes than opens," said Janet Johnston, portfolio manager at TrimTabs Asset Management.

"The market was starting to price in the worst-case scenario: a recession," Johnston said

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Still, the market's downturn has left stocks substantially less expensive than they were heading into the fourth quarter, Johnston noted.

"And that sets up a good buying opportunity," she said.

On Friday, the S&P 500 index fell 3.09 points, or 0.1 percent, to 2,485.74. The Dow Jones Industrial Average dropped 76.42 points, or 0.3 percent, to 23,062.40. The average had briefly climbed to 243 points.

Technology companies, a big driver of the market's gains before things deteriorated in October, were among the big decliners. Alliance Data Systems dropped 1.4 percent to $149.82.

Oil prices recovered after wavering in midmorning trading. Benchmark U.S. crude rose 1.6 percent to settle at $45.33 a barrel in New York. Brent crude, used to price international oils, inched up 0.1 percent to close at $52.20 a barrel in London.

Wells Fargo rose 0.5 percent to $45.78 on news that the lender has agreed to pay $575 million in a national settlement with state attorneys general over its fake bank accounts scandal. The San Francisco-based bank has acknowledged that its employees opened millions of unauthorized bank accounts for customers in order to meet unrealistic sales goals.

Tesla climbed 5.6 percent to $333.87 after naming two independent directors to its board under an agreement with federal regulators.

Homebuilders fell broadly in the morning after the National Association of Realtors said its pending home sales index fell last month as fewer Americans signed contracts to buy homes. Higher mortgage rates and prices are squeezing would-be buyers out of the market, especially in the West. The stocks mostly recovered by mid-afternoon. William Lyon Homes gained 3.4 percent to $10.81.

Bonds prices recovered after midday dip, sending the yield on the 10-year Treasury down to 2.72 percent from 2.74 percent late Thursday.

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The dollar declined to 110.41 yen from Thursday's 110.74 yen. The euro weakened to $1.1442 from $1.1449.

Gold edged up 0.1 percent to $1,283 an ounce and silver gained 0.8 percent to $15.44 an ounce. Copper rose 0.5 percent to $2.68 a pound.